Perspectives can change at Liberty Mutual

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It’s amazing what arrives over the transom some days. Amid the political hate mail (“You’re a real looser,” was one of my recent favorites) and the candidates’ fund-raising pitches and the dozens of offers to have extra cash by the weekend, one arrived this week that stood very much apart.

It came from a lawyer in a place called Campbell County, Kentucky, which sounds like a place that only horses could love, but I may be wrong about that. The subject said, “Liberty Mutual,” and the first line ­offered an expression of thanks – to me.

Hmm, Liberty Mutual. Good company, especially if you happened to be the recently departed chief executive officer, Ted ­Kelly, who received an annual pay package worth nearly $50 million for four consecutive years, or the current CEO, who dropped $4.5 million to renovate his 1,335 square-foot office when he took over last year. To be fair, that included his personal bathroom with the carved stone shower, and the private gym with glass brick walls.

Of course, there’s also the fleet of five luxury, long-range, corporate jets housed in a state-of-the-art hangar at Hanscom Field, planes that seem to spend an inordinate amount of time soaring toward Florida, the Caribbean, Hawaii, and the Pacific coast, hotspots, yes, but not for insurance.

Remember the “accounting issues?” in describing Kelly’s pay? The “security reasons?” in explaining the no comments about the flights? How about the “phantom stock” that resulted in very real bank deposits? All at a mutual company, owned by the policyholders who never get dividends.

And who wants to forget the fact that the top nine executives were paid a total of $108 million one recent year. Or the company directors, each of whom receives $200,000 annually to valiantly shout, “Yes!” at every executive pay hike proposal, all while sitting on each other’s corporate boards, golfing at each other’s country clubs, and buying estates in each other’s ­vacation towns.

But where were we? Oh, yes, the lawyer, in Kentucky, writing a thank you note.

The attorney is Jeffrey Sanders, and in the e-mail and a subsequent phone call, he described his client, James Demetre, as a self-made businessman who grew up above a fish market and now owns a successful company that sells electronics to department stores in Kentucky and parts of Ohio.

Demetre and his wife had acquired a vacant piece of land from his in-laws that, 50 years earlier, housed a gas station. The under­ground tanks were removed in 1998.

A few years ago, a neighbor sued, saying that toxic petroleum fumes had been flowing into their house from Demetre’s lot and injuring their six young children. Demetre turned it over to his insurer, Indiana Insurance, which is described on its website as “a Liberty Mutual company.”

Indiana Insurance immediately got very aggressive. The problem is, it didn’t get aggres­sive with the neighbors that claimed, questionably, to be poisoned. No, it sued Demetre, charging that he must have known there was a problem with his land.

“They tried to grind him into dust and debt,” said Sanders.

Demetre, though, would not fold quietly. He sued Indiana Insurance back, accusing them of breach of contract, and for the next three-plus years, company and client wrangled in court as legal fees soared and revelations were uncovered that made the insurer look, well, not very good. My personal ­favorite: The Liberty Mutual claims adjuster on the Demetre claim had a track record of no payments in 72 percent of his toxic tort cases. They may build a statue of him in their new headquarters.

Now we get to the “thank you” part of the Sanders note. Sanders was preparing for trial this past spring when he came across a series of columns about Liberty Mutual in this very space: the planes, the salaries, the office makeovers, the excess of it all.

“It helped me focus,” said Sanders. “It assured me that there’s something there. There’s a reason for the behavior in this case. It starts to make sense when you go back and see some of the excesses at the highest level of the corporation.”

So he pressed, and pressed hard. Ultimately, Indiana Insurance settled the original suit with Demetre’s neighbor for $165,000, a relatively paltry sum, given the legal warfare it caused.

In late September, Demetre and Indiana Insurance went to trial. At least one Liberty Mutual attorney from Boston sat in the courtroom. At one point, when a witness mentioned Ted Kelly’s name, Sanders casually said something like, “I’ve read about him.”

The trial lasted eight days. There were so many objections from the Liberty Mutual legal team that Sanders wondered aloud in court if they’d have to replace the new carpet.

The deliberations lasted about 7 hours. The 12-member jury came back Monday with a verdict against Indiana Insurance and an award for Demetre in the amount of – drumroll here, please — $3.425 million, the second highest award ever given in the county, with the highest level of punitive damages.

Beyond that, Sanders can put in for legal fees, which are well over half a million dollars.

There’s no indication whether Liberty Mutual plans to pay up or appeal. “We’re evaluating our options,” said company spokesman John Cusolito.

It’s funny how perspectives change. In 2010, Liberty Mutual was tossing around pay packages of at least $4 million to nine different executives because, hey, why not? Ted Kelly spent four years making nearly a million a week and, by all indi­cations, makes more than $3 million in annual pension payments now. It costs nearly $100,000 to fly one of their Gulfstreams to Hawaii, which they did often.

But when it’s time to pay a policyholder a $3.4 million court-ordered judgment because of the company’s own negligence, it suddenly seems like a ridiculously large sum of money to them.

James Demetre, by the way, is 72 years old, and his wife just had open heart surgery, meaning it probably doesn’t even matter to him that the award will start earning 12 percent annual interest, or more than $400K a year (roughly two days pay for Kelly) as of today.

“The money is secondary,” said Sanders, a line never before uttered on the executive floor of Liberty Mutual. “It’s about standing up to large corporations that don’t follow the rules. They were a corporate bully too large to care, and they did everything possible to punish James Demetre for standing up to them.”

Wouldn’t it be great if, ­instead of Liberty Mutual appealing the judgment, we could appeal all their excess executive pay?